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Assembly Bill No. 2987
CHAPTER 700An act to amend Section 401 of, to add Article 4 (commencing withSection 440) to Chapter 2.5 of Part 1 of Division 1 of, and to add Division2.5 (commencing with Section 5800) to, the Public Utilities Code, and toamend Section 107.7 of the Revenue and Taxation Code, relating to cableand video service.
[Approved by Governor September29, 2006. Filed withSecretary of State September29, 2006.]
legislative counsel
’
s digest
AB2987, Nunez.Cable and video service.(1) Existing law provides that any city, county, or city and county mayauthorize by franchise or license the construction and operation of acommunity antenna television system and prescribe rules and regulationsto protect the subscribers. Existing law requires that cable and videoservice providers comply with speci
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ed customer service standards andperformance standards.This bill would enact the Digital Infrastructure and Video CompetitionAct of 2006 and would establish a procedure for the issuance of statefranchises for the provision of video service, which would be de
ﬁ
ned toinclude cable service and open-video systems, that would be administeredby the Public Utilities Commission. The commission would be the solefranchising authority for state franchises to provide video services. The billwould require any person or corporation that seeks to provide videoservice in this state to
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le an application with the commission for a statefranchise with speci
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ed information, signed under penalty of perjury. Bycreating a new crime, the bill would impose a state-mandated localprogram.The bill would provide that cities, counties, cities and counties, or jointpowers authorities would receive state franchise fees in exchange for theuse of public rights-of-way for the delivery of video services providedwithin their jurisdictions, based on gross revenues, pursuant to a speci
ﬁ
edformula. The bill would prescribe the extent of the obligation of statefranchise holders to provide public, educational, and governmental access(PEG) channels. The bill would also authorize local entities to establish afee to support the costs of PEG channel facilities, in the amount of 1% of gross revenues, or more in speci
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ed circumstances.The bill would also require these local entities to permit the installationof networks by holders of state franchises. The bill would also prohibit aholder of a state franchise from discriminating against or denying access toservice to any group of potential residential subscribers because of their
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income and would provide that this provision is satis
ﬁ
ed if certainconditions are met by holders or their af
ﬁ
liates with 1,000,000 or moretelephone customers or if alternative conditions are met by a holder or itsaf
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liates with 1,000,000 or fewer telephone customers in California.The bill would require the holder of a state franchise to notify a localentity that it will provide video service in the entity
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s jurisdiction at least10 days before offering service. The bill would also require the localfranchising entity to enforce customer service and protection standards andto enact an ordinance or resolution providing a schedule of penalties forany material breach of those standards by a holder of a state franchise,thereby imposing a state-mandated local program.The bill would also require that any state franchise holder employingmore than 750 employees in California make an annual report of speci
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edinformation to the commission. The bill would also require that all statefranchise holders make an annual report to the commission regardingavailability of and subscription to broadband and video service.The bill would provide that a state franchise is valid for 10 years andwould require a provider to apply to the commission for renewal of thefranchise for any additional 10-year period.The bill would authorize the commission
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s Division of RatepayerAdvocates to advocate on behalf of video service customers in connectionwith state franchise renewal and enforcement of service standards.The bill would prohibit the commission from permitting a telephonecorporation that is providing video service pursuant to a state franchise toauthorize an increase in rates for residential basic service until January 1,2009, unless that corporation is regulated under rate of return regulation,subject to speci
ﬁ
ed exceptions.(2) Existing property tax law speci
ﬁ
es the manner in which local taxassessors determine the value of cable television possessory interests thatare created in a cable television franchise or license that is granted by alocal government.This bill would specify that this valuation method also applies topossessory interests created in a cable franchise or license or a franchise toprovide video services that is granted by the state under the bill.(3) Existing law provides for the Public Utilities Commission UtilitiesReimbursement Account. Existing law authorizes the commission toannually determine a fee to be paid by every public utility providingservice directly to customers or subscribers and subject to the jurisdictionof the commission, except for a railroad corporation. Existing law requiresthe commission to establish the fee, with the approval of the Departmentof Finance, to produce a total amount equal to that amount established inthe authorized commission budget for the same year, and an appropriatereserve to regulate public utilities, less speci
ﬁ
ed sources of funding.This bill would establish a Video Franchising Account in thecommission
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s Utilities Reimbursement Account, require the commissionto annually determine a fee to be paid by an applicant or holder of a state
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franchise, and authorize the commission to take various actions to collectthe fees.(4) The California Constitution requires the state to reimburse localagencies and school districts for certain costs mandated by the state.Statutory provisions establish procedures for making that reimbursement.This bill would provide that with regard to certain mandates noreimbursement is required by this act for a speci
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ed reason.With regard to any other mandates, this bill would provide that, if theCommission on State Mandates determines that the bill contains costs somandated by the state, reimbursement for those costs shall be madepursuant to the statutory provisions noted above.
The people of the State of California do enact as follows:
SECTION 1.Section 401 of the Public Utilities Code is amended toread:401.(a) The Legislature
ﬁ
nds and declares that the public interest isbest served by a commission that is appropriately funded and staffed, thatcan thoroughly examine the issues before it, and that can take timely andwell-considered action on matters before it. The Legislature further
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ndsand declares that funding the commission by means of a reasonable feeimposed upon each common carrier and business related thereto, eachpublic utility that the commission regulates, and each applicant for, orholder of, a state franchise pursuant to Division 2.5 (commencing withSection 5800), helps to achieve those goals and is, therefore, in the publicinterest.(b) The Legislature intends, in enacting this chapter, that the fees leviedand collected pursuant thereto produce enough, and only enough, revenuesto fund the commission with (1) its authorized expenditures for each
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scalyear to regulate common carriers and businesses related thereto, publicutilities, and applicants and holders of a state franchise to be a videoservice provider, less the amount to be paid from special accounts exceptthose established by this article, reimbursements, federal funds, and theunencumbered balance from the preceding year; (2) an appropriatereserve; and (3) any adjustment appropriated by the Legislature.(c) For purposes of this chapter, an
“
appropriate reserve
”
means areserve in addition to the commission
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s total authorized annual budget toregulate common carriers and related businesses, public utilities, andapplicants and holders of a state franchise to be a video service provider,to be determined by the commission based on its past and projectedoperating experience.SEC. 2.Article 4 (commencing with Section 440) is added to Chapter2.5 of Part 1 of Division 1 of the Public Utilities Code, to read:
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Article 4.Video Service Franchises440.(a) For purposes of this article,
“
state franchise,
”
“
video service,
”
and
“
video service provider
”
shall have the same meaning as those termsare de
ﬁ
ned in Section 5830.(b) The Public Utilities Commission Video Franchising Account ishereby created in the Public Utilities Commission Utilities ReimbursementAccount.441.The commission shall annually determine a fee to be paid by anapplicant or holder of a state franchise pursuant to Division 2.5(commencing with Section 5800). The annual fee shall be established toproduce a total amount equal to that amount established in the authorizedcommission budget for the same year, including adjustments for increasesin employee compensation, other increases appropriated by theLegislature, and an appropriate reserve to carry out the provisions of Division 2.5 (commencing with Section 5800), less the amount to be paidfrom reimbursements, federal funds, and any other revenues, and theamount of unencumbered funds from the preceding year.442.(a) The commission shall establish the fee pursuant to Section441 with the approval of the Department of Finance. The commission shallspecify the amount of its budget to be
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nanced by the fee in its annualbudget request.(b) The fee shall be determined and imposed by the commissionconsistent with the requirements of Section 542 of Title 47 of the UnitedStates Code.(c) All fees collected by the commission pursuant to this section shallbe transmitted to the Treasurer at least quarterly for deposit in the PublicUtilities Commission Video Franchising Account.(d) The commission shall maintain those records as are necessary toaccount separately for all fees and charges, including the fees authorizedby Section 441.(e) The commission shall authorize refunds of the fees provided for inthis article when the fees were collected in error.443.(a) The commission may require a video service provider subjectto this article to furnish information and reports to the commission, at thetime or times it speci
ﬁ
es, to enable it to determine the fee pursuant toSection 441.(b) Any video service provider required to submit information andreports under this article may, in lieu thereof, submit information orreports made to any other governmental agency if all of the following aremet:(1) The alternate information or reports contain all of the informationrequired by the commission.(2) The requirements to which the alternate reports or information areresponsive are clearly identi
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ed.(3) The information or reports are certi
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ed by the video serviceprovider to be true and correct.
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